Marshall Islands in 2007

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The economy of the Marshall Islands in 2007 remained heavily dependent on payments from the U.S., under the terms of the Compact of Free Association, and U.S. aid represented 60.2% of the Marshall Islands’ 2007 budget of $124.6 million. The economy continued to flounder, and at one point the government, which employed 64% of the workforce, borrowed $500,000 from compact funds (without appropriate authority from the U.S. Department of the Interior) to pay for fuel for the country’s main power utility. The Interior Department objected but was constrained by difficulties over land-rental agreements for the U.S. Army’s Kwajalein Atoll missile-testing range. The U.S. and Marshalls governments signed a deal in 2003 on the use of the site until 2086, but local landowners were reluctant to renew the current land lease, due to expire in 2016, unless infrastructure was improved in areas where local workers resided.

More tension arose over a subsidiary agreement of the original compact, which provided for settlement of all claims arising from the U.S. nuclear tests conducted between 1946 and 1958 at Bikini and Enewetak atolls. The Nuclear Claims Tribunal awarded $1 billion compensation to Marshall Islanders exposed to fallout during the 1954 hydrogen bomb test at Bikini Atoll. The award brought an end to an action initiated 15 years earlier, but the plaintiffs were unlikely to receive compensation because the tribunal had virtually no funds.